The sudden decision to exclude more than 700,000 borrowers from President Biden’s $400 billion student loan could make it harder for opponents of that policy to challenge it in court, and some say the change appears to have been made for precisely that reason.
Shortly after Biden’s policy was announced, officials said loan forgiveness would only apply to borrowers who consolidated their debts with the Department of Education. That last-minute change made more than 700,000 borrowers ineligible for the subsidy because their loans are still serviced by private companies.
Just before that change was announced, Nebraska and five other states filed a lawsuit arguing that their finances would be negatively affected by the brochure. These states argued that they had the right to sue because millions of dollars in public pension funds are invested in private companies that service many of these student loans, and that Biden’s program would hurt these companies and lead to lower returns.
Legal experts told Fox News Digital that by making loans managed by these companies ineligible for forgiveness, the Biden administration may have stripped all six states of any standing in the courts and likely helped make the policy survived an early court challenge.
WHITE HOUSE SUGGESTS BIDEN’S $500B STUDENT LOAN WILL BE PAID OUT OF DEFICIT SPENDING
“By getting rid of privately backed loans, they probably cut off the right to sue of certain investors, financial institutions and state governments who might argue that the proposal would negatively affect them,” said Jack Fitzhenry, legal policy analyst. at the Heritage Foundation.
“This makes it much more difficult for states and private debt management companies to sue for lost revenue,” Fitzhenry said.
Policy experts said this is not the first time the White House has revised the pamphlet’s parameters in response to legal attacks. One of the first legal challenges filed against the gift was from a borrower who would have to pay taxes on the gift because his state of residence considers the cancellation of the debt as income.
STATE AGS WEIGH LEGAL CHALLENGE TO BIDEN’S $500B STUDENT LOAN HANDOUT
“When that lawsuit was filed, there was no indication that borrowers could opt out of the official website created to provide information,” said Beth Akers, a senior fellow at the American Enterprise Institute. “After the lawsuit, the website was updated to say that you could opt out and that might be enough to nullify the lawsuit.”
The White House has reviewed the pamphlet proposal multiple times since Biden first announced in August his plans to forgive up to $10,000 for borrowers making less than $125,000 a year, and up to $20,000 for people in families making less than $250,000. .
The revisions have been heavily criticized by policy experts, some of whom have argued that the administration seemed unprepared to implement the program. Now, some say that perhaps the White House’s tactics are more strategic than it appears at first glance.
BIDEN STUDENT LOAN HANDOUT TO COST OVER $400 BILLION: CBO
CLICK HERE TO GET THE FOX NEWS APP
“I think it’s a mistake to look at all the apparent chaos and conclude that nothing is intentional,” Fitzhenry said. “Not everything is intentional, but at least some of it appears to be strategic. They are adjusting the proposal in real time to make sure it lasts.”